The chairman of Bank of Cyprus’s board of directors Josef Ackermann said that the lender is expected to resume normal provisioning next year and so return to profitability after announcing last week a €500m increase in provisions for loan impairments.

“The rationale and the motivation for the change in the balance sheet de-risking strategy is to provide the bank more optionality and flexibility in exploring innovative strategic solutions for accelerating the reduction of non-performing exposures for the benefit of its shareholders, while also facilitating a more focused dialogue with the regulator,” Ackermann told shareholders at the bank’s annual general meeting on Tuesday.

Ackermann, who joined Bank of Cyprus following the capital increase of 2014, also referred to the reduction of the bank’s delinquent portfolio, which fell in the second quarter of 2017 to €9.7bn or 50 per cent of its loan portfolio from €10.4bn in March or 52 per cent.

“A steeper reduction and eventual elimination of non-performing exposures depend not only on the bank’s actions but also on the engagement of bank borrowers and more broadly the whole Cypriot society,” he said. “To achieve accelerated progress in reducing non-performing loans, we need first and foremost a stronger commitment by individual borrowers, both large and small, to cooperate with the bank and to adhere to the principle that borrowers should respect and honour their financial obligations. Bank shareholders, many of whom are actually bank depositors, have already made major sacrifices in addressing the challenge of high non-performing loans”.

“They cannot and should not do it alone,” he said, adding that he encouraged the bank’s customers not servicing their loans to cooperate with the Bank of Cyprus and “find innovative and practical solutions”.

The Swiss national and former Deutsche Bank chief executive officer said that Bank of Cyprus’s strategy continues to remain focused on helping in the recovery of the Cypriot economy, which returned to growth in 2015 after a prolonged recession and is projected to expand this year 2.9 per cent after growing 2.8 per cent last year. “The bank and the Cypriot economy are in the same boat and we need to work together with the whole Cypriot society,” he said.